Jan 16, 2013

Disability Recipients Concealing Self-Employment Income

From a recent report by Social Security's Office of Inspector General (OIG) (footnote omitted):

Our objective was to identify individuals receiving Disability Insurance (DI) benefits who participated in self-employment activities and concealed the income by reporting it under another person’s Social Security number (SSN). ...

We reviewed a sample of 50 beneficiaries who reported SEI [Self Employment Income] before they were approved for DI benefits and had a spouse or child who reported SEI after the beneficiary was approved. Our review did not find any instances where beneficiaries concealed SEI by reporting it under a child’s SSN. However, our review found that 5 (10 percent) of the 50 beneficiaries were engaged in self-employment activities and concealed their income by reporting it under their spouse’s SSN. Of these five, we determined that three beneficiaries received improper payments of $348,000, and their auxiliaries received an additional $77,000. ...

The analysis we undertook for a sample of beneficiaries was labor-intensive and yielded a small number of beneficiaries who were actually concealing SEI. Therefore, we cannot recommend that the Agency integrate such a process into its procedures. However, we would be willing to work with SSA to develop a more sophisticated method for profiling cases where individuals are concealing SEI while receiving DI benefits.

10 comments:

Anonymous
said...

The analysis we undertook for a sample of beneficiaries was labor-intensive and yielded a small number of beneficiaries who were actually concealing SEI. Therefore, we cannot recommend that the Agency integrate such a process into its procedures.

What a load of baloney. Are they trying to say that the manhours expended cost MORE than $425k that was saved by their effort. Fraud is fraud. As long as it costs less to find the fraud than it does to pay it...search for it, prosecute the fraudulent party and implement procedures to prevent the same from happening.

The real problem with the SEI is the fraudulantly siled SEI taxes resulting in the EITC. Every Aril and May SSA will get thousands of alerts for unreported income that is posted as self-employment. This is usually for parents of children receiving SSI. The SEI reported to IRS is not high enough to reduce the child's SSI, so the agency doesn't look at it as fraud against SSA. Although the amount of many hours needed to investigate these alerts is staggering. When we have to question the parent about the SEI, we hear the same thing over and over - I didn't work self-employment. But when we pull tax returns, there is usually a large refund that was paid to the same parent.

yeah, I can't imagine the "investigation" process entailed too much more than pulling some tax info on household members (IRS should be working well with SSA by now...) and then following up. Shoot, a GS-9 with some steps spending an entire week would have wages of about $1100, double that to account for benefits, etc., power, water, and heat for the soul for that week, all told you're at less than $2500. You get that back after two or three months of stopped DI + aux bennies...

A couple of comments, not that I have any criticism of the report itself:

1) This was not a matter of reviewing tax records. In the case of an ongoing business and the business owner becomes disabled, it would be normal for the spouse to continue to operate the business (that's why only 5 of 50 beneficiaries who's spouse continued to report SEI were found to have engaged in fraud). This was a matter of playing private detective. Scoping out the store to see who was working, following the beneficiary, interviewing neighbors, etc. To describe this work as labor intensive and expensive would be an understatement. It's why the CDI units are used so infrequently.

2) Finding that the beneficiaries erroneously collected $425k in benefits is not the same as saying the investigation saved $425k. Good luck collecting even a small portion of the money from these jailbirds.

A medical condition that is severe enough to prevent a wage earner from working can be disregarded by a self employed person who is willing to work despite their disability and/or able to make adjustments in their work environment. In "retirement" claims from some self employed, this was known as questionable retirement. The same concept applies to some of the disabled self employed. For both types of claims (retirement or disability) from the self employed, the basic concept of fairness must apply equally to the wage earner or to that person in a position of control over their earnings from work. Unfortunately, I do not think CRs have the ability or understanding or desire to handle such interviews/investigations.

I get SSI since I'm Disabled, I live alone with a cat, since I have nowhere to go and cause I live almost in the middle of nowhere, I barely exist on SSI, at least a couple of people, one a Swede(supposedly) and the other a Repub from here in the USA said I couldn't be existing on just SSI and that it didn't add up. I do of course and I'm frugal, last month after paying My bills, I replaced a 6year old car battery in My car at Walmart, bought a DVD that I'd been looking for on ebay, bought a cheap used video card to replace an older card that is being assisted by a dying GTX590 card, bought two pair of 8XL jeans and some 6XL under shorts, I used to work as a Security Guard, One of My former employers allowed Me to sit down cause My weight had gone up, after He sold the place, the new owner started firing all the old employees(Me and the Sergent were the last to be fired, cause we knew the old owners), after that the only jobs around were those that required standing and I could not do that anymore due to back problems(I'm 6'1" tall), then in 2002 I broke the left lower leg and I've had joint problems in both legs ever since and so I'm now fully unable to work and of course I can't compete for any jobs, so in 2003 I applied and since I met all the strict requirements, I got into the SSI program, in 2004 I moved to where I am now as My Brother whom I'd lived with since 1998 was dying, so I found a cheap place to live at and so I found a niche. My check of $866.40 per month is not lavish or extravagant in the least, $710.00 comes from the SSA and the other $156.40 comes from CA, I do not receive any Rental Assistance or Food Stamps, No one who lives in CA and gets SSI will or does get Food Stamps cause of a dispute between CA and the USDA/SSA....